Thrift Takeover Leaves Questions

Depositors Worry About Their Funds

NEWPORT NEWS — Workers at Trustbank Savings spent Monday trying to calm worried depositors who had learned that the thrift had been taken over by the federal government.

The savings and loan, the third largest in Virginia, was taken over Friday by the Resolution Trust Corp., the federal agency that manages insolvent thrifts. The Tysons Corner-based savings bank has suffered through a slump in the Northern Virginia real estate market, and it has a portfolio of $116.2 million in non-paying loans.

Some depositors came to the bank's Newport News branch Monday to ask whether they should withdraw their funds. Most who visited the office near Hidenwood seemed satisfied with the explanations they received from Trustbank employees.

``The government has it insured, so I don't have to worry about it,'' said Kikue Ponton, who has invested in certificates of deposit at Trustbank for six years.

``I guess that's something I learned 30 years ago - don't put money in a bank that's not insured by the government,'' said Luther White of Newport News.

Andrea Plater, an RTC spokeswoman, said depositors would be unaffected by the takeover. Deposits remain insured up to $100,000, and depositors are free to withdraw or deposit money, she said.

Interest rates on current deposits and certificates of deposit will also remain in effect, she said.

But Plater said Trustbank's federal managers would probably lower rates on new certificates and accounts, bringing them down to the local market average. Trustbank's rates had been running about 0.25 to 0.5 percentage points above the Peninsula average, banking sources said.

The thrift has seven branches in Hampton Roads, including one each in Newport News and Williamsburg. The local branches remained open through the takeover.

Stockholders in the savings bank aren't so lucky. In the process of the takeover, federal regulators converted Trustbank into a mutual savings bank, meaning it is now owned by its depositors.

Trustbank stockholders will eventually be able to file claims against the reorganized institution, but stock market analysts and federal officials say they are unlikely to get very much money, if any.

``But Trustbank has been dribbling down and dribbling down for the last couple of years. This isn't a surprise,'' said John H. Maser, a stockbroker with Wheat First Securities in Newport News.

He said most stockholders in the savings bank probably looked at their holding as being a highly speculative one. In the thrift's last annual report, released in July, its outside auditor, KPMG Peat Marwick, cautioned that Trustbank could be a candidate for a government takeover because it did not meet federal capital requirements.

Trustbank's problem, said the Office of Thrift Supervision, which regulates savings and loans, was its aggressive push in the 1980s to make relatively risky real estate loans like condominium investment properties, hotels, office buildings and apartments.

Its bad loans totaled $116.2 million - a sum six times the amount of capital the savings bank could actually lay its hands on.

The office said it ordered the federal takeover ``because Trustbank was operating in an unsafe and unsound condition.'' The regulator said Trustbank did not have enough capital and, with a continuing slump in real estate markets, was unlikely to replenish capital without federal help.

Trustbank had lost money for nearly two years - reporting seven money-losing quarters in a row in 1989 and 1990. The savings bank had assets totaling $1.87 billion as of Sept. 30.

Depositors who visited the local branches this weekend were greeted by a sign on the door stating that the thrift, now called Trustbank Federal Savings Bank, was taken over by RTC as of Friday.

Some depositors who went to the Hidenwood branch Monday said they did so because they were considering withdrawing their money. Others said they first learned of the takeover when they saw the sign on the door, or in the course of doing business while they talked to thrift employees.

``I don't know what to do. I'm still thinking about taking my money out,'' said one woman who seemed shaken by the news. The woman, who did not give her name, said she had certificates of deposit in the savings bank, and that she would have to pay a penalty if she withdrew the funds early.

Bobbie Parker, another depositor, said she planned to stay with the thrift because, ``I like dealing with the people here. They're very friendly.

``When you hear the government is going to take over something, you worry. But they assured me that I was insured, and I didn't have anything to worry about,'' she said.

Trustbank is the fourth thrift with local branches to be taken over by the Resolution Trust Corp.

Community Federal Savings and Loan in Newport News and People's Savings and Loan in Hampton were taken over in 1989, and they were merged with Consolidated Bank & Trust Co., a Richmond commmercial bank. Federal regulators are still running Norfolk-based Atlantic Permanent Savings Bank, which was taken over in 1989.